This morning the Court of Appeal rejected the Chorus appeal of the High Courts earlier ruling upholding the Commerce Commissions process interpreting the 2011 Telecommunications Act.
In a nutshell this means that the whole process of moving to ‘cost plus’ based pricing for wholesale, regulated copper broadband services just got 1 step closer.
We’re glad to see this happen, but we really just want to see Chorus get on with it.
This saga has come to represent why New Zealand needed to move from the old privatised ‘monopoly utility’ to a structurally separated, regulated, open access model. that required a move from the old ‘retail minus’ wholesale model to a genuine and non-discriminatory ‘cost plus’ model.
The reason for this was simple, retail minus simply cannot exist in a structurally separated model, Spark (Telecom) must have the same input costs as everybody else or the only possible result is a market of ‘stunted dwarves’ whose margins and profitability are set at the whim of the dominant player.
Tune out the spin and you’re left with two conclusions, firstly the Government actually got the 2011 Act pretty much right and secondly that the day must come when Chorus investors must seriously question the board and management as to the wisdom and cost of the strategy they have chosen to follow.